[Federal Register Volume 72, Number 37 (Monday, February 26, 2007)]
[Notices]
[Pages 8339-8346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-3172]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service


Notice for Requests for Proposals for Guaranteed Loans under the 
Section 538; Guaranteed Rural Rental Housing Program (GRRHP) for Fiscal 
Year 2007

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

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SUMMARY: This is a request for proposals for guaranteed loans under the 
section 538 Guaranteed Rural Rental Housing Program (GRRHP) pursuant to 
7 CFR 3565.4 for Fiscal Year (FY) 2007 subject to the availability of 
funding. FY 2006 funding for the section 538 was $99 million. This 
Notice is being issued prior to passage of a final appropriations bill 
to allow applicants sufficient time to leverage financing and submit 
proposals in the form of ``RESPONSES'', and give the Agency maximum 
time to process applications within the current fiscal year. A Notice 
of Funding Availability will be published announcing the funding level 
for GRRHP for FY 2007 once an appropriations act has been enacted. The 
commitment of program dollars will be made to applicants of selected 
responses that have fulfilled the necessary requirements for 
obligation, to the extent an appropriation act provides funding for 
GRRHP for FY 2007. Expenses incurred in developing applications will be 
at the applicant's risk. The following paragraphs outline the 
timeframes, eligibility requirements, lender responsibilities, and the 
overall response and application processes.
    The GRRHP operates under 7 CFR part 3565. The GRRHP Origination and 
Servicing Handbook (HB-1-3565) is available to provide lenders and the 
general public with guidance on program administration. HB-1-3565, 
which contains a copy of 7 CFR part 3565 in Appendix 1, can be found at 
the Rural Development Instructions Web site address http://www.rurdev.usda.gov/regs/hblist.html#hbw6.
    Eligible lenders are invited to submit responses for the 
development of affordable rural rental housing, the acquisition with 
rehabilitation of affordable rural rental housing, and the 
revitalization, repair, and transfer (as stipulated in 7 CFR 3560.406) 
of existing direct section 515 housing (transfer costs are subject to 
Agency approval and must be an eligible use of loan proceeds as listed 
in 7 CFR 3565.205). Equity payment, as stipulated 7 CFR 3560.406, in 
the transfer of existing direct section 515 housing, is an eligible use 
of loan proceeds. In order to be considered, direct section 515 housing 
projects must need repairs and/or undergo revitalization of a minimum 
of $6,500 per unit.
    The Rural Housing Service (RHS) will review responses submitted by 
eligible lenders, on the lender's letterhead, and signed by both the 
prospective borrower and lender. Although a complete application is not 
required in response to this Notice of requests for proposals, eligible 
lenders may submit a complete application concurrently with the 
response. However, submitting a complete application will not have an 
effect on the respondent's score.

DATES: The RHS will review and score all responses received through 
April 27, 2007. Those responses that are selected that subsequently 
submit complete applications and meet all Federal environmental 
requirements will receive commitments to the extent an appropriation 
act provides funding for GRRHP for FY 2007 until all funds are 
expended. Responses received prior to April 27, 2007, that meet program 
criteria, but score less than 25 points or score 25 points or more but 
have a development cost ratio of equal to or more than 70 percent may 
be selected for obligation after April 27, 2007, with the highest 
scoring responses receiving priority as long as funds remain available. 
The Agency will continue to select the highest scoring Notice responses 
received after April 27, 2007, notwithstanding the score, as long as 
the response meets program criteria and funds remain available using 
the procedure outlined in the next paragraph.
    Once a complete application is received and approved by the State 
Office, an obligation request (request) for 2007 funds will be 
submitted [via fax] by the State Office to the National Office. 
Requests submitted to the National Office will be accumulated, but

[[Page 8340]]

not obligated, throughout the week until the weekly request submission 
deadline of midnight Eastern Standard Time (e.s.t.) every Thursday. To 
the extent that an appropriations act provides funding for GRRHP for FY 
2007 and provided that funds remain, the National Office will obligate 
the requests accumulated through the weekly request submission deadline 
of the previous week by the following Tuesday (i.e., requests received 
from Friday, May 18, 2007, to Thursday, May 24, 2007, will be obligated 
by Tuesday, May 29, 2007). However, requests received prior to April 
27, 2007 that are not eligible for obligation until after April 27, 
2007, will be obligated no earlier than Tuesday, May 1, 2007. Funds 
will be allocated in scoring order, with the highest scoring requests 
being obligated first, until all funds are exhausted. In the event of a 
tie, priority will be given to the project that: 1st--has the highest 
percentage of leveraging (lowest Loan to Cost); 2nd--is in the smaller 
rural community.
    As long as funds remain available, requests will be accepted and 
obligated per this guidance until, September 28, 2007, 12 p.m. e.s.t. 
Once FY 2007 funds are exhausted, if eligible, requests not obligated 
will be retained for consideration for FY 2008 funds without having to 
submit a new response. A notice will be placed in the Federal Register 
if all FY 2007 funds are committed prior to September 28, 2007.
    Eligible lenders mailing a response or application must provide 
sufficient time to permit delivery to the Submission Address on or 
before the closing deadline date and time. Acceptance by a U.S. Post 
Office or private mailer does not constitute delivery. Postage due 
responses and applications will not be accepted.
    Submission Address: Eligible lenders will send responses to the 
Multi-Family Housing Director in the State Office where the project 
will be located. The lender will also send a copy of its response 
(copies of ``Lender Certification'' letter and ``Project Specific 
Data'' sheets only; do not include any application supporting 
documentation, i.e., market studies, plans/specs, etc.) to: C.B. 
Alonso, Senior Loan Specialist, Guaranteed Rural Rental Housing 
Program, Multi-Family Housing Processing Division, U.S. Department of 
Agriculture, South Agriculture Building, Room 1271, STOP 0781, 1400 
Independence Avenue, SW., Washington, DC 20250-0781.
    Rural Development State Offices, their addresses, telephone 
numbers, and person to contact follows: [this information may also be 
found at http://www.rurdev.usda.gov/recd_map.html]

    Note: Telephone numbers listed are not toll-free.

Alabama State Office, Suite 601, Sterling Centre, 4121 Carmichael 
Road, Montgomery, AL 36106-3683, (334) 279-3455, TDD (334) 279-3495, 
James B. Harris
Alaska State Office, 800 West Evergreen, Suite 201, Palmer, AK 
99645, (907) 761-7740, TDD (907) 761-8905, Deborah Davis
Arizona State Office, Phoenix Courthouse and Federal Building, 230 
North First Ave., Suite 206, Phoenix, AZ 85003-1706, (602) 280-8765, 
TDD (602) 280-8706, Ernie Wetherby
Arkansas State Office, 700 W. Capitol Ave., Room 3416, Little Rock, 
AR 72201-3225, (501) 301-3250, TDD (501) 301-3063, Gregory Kemper
California State Office, 430 G Street, <greek-i>4169, Davis, CA 
95616-4169, (530) 792-5830, TDD (530) 792-5848, Stephen Nnodim
Colorado State Office, 655 Parfet Street, Room E100, Lakewood, CO 
80215, (720) 544-2923, TDD (800) 659-2656, Jamie Spakow
Connecticut--Served by Massachusetts State Office
Delaware and Maryland State Office, 1221 College Park Drive, Suite 
200, Dover, DE 19904, (302) 857-3600, TDD (302) 857-3585, W. Drew 
Clendaniel
Florida & Virgin Islands State Office, 4440 N.W. 25th Place, 
Gainesville, FL 32606-6563, (352) 338-3465, TDD (352) 338-3499, 
Elizabeth M. Whitaker
Georgia State Office, Stephens Federal Building, 355 E. Hancock 
Avenue, Athens, GA 30601-2768, (706) 546-2164, TDD (706) 546-2034, 
Wayne Rogers
Hawaii State Office, (Services all Hawaii, American Samoa Guam, and 
Western Pacific), Room 311, Federal Building, 154 Waianuenue Avenue, 
Hilo, HI 96720, (808) 933-8305, TDD (808) 541-2600, Thao Khamoui
Idaho State Office, Suite A1, 9173 West Barnes Dr., Boise, ID 83709, 
(208) 378-5630, TDD (208) 378-5644, Roni Atkins
Illinois State Office, 2118 West Park Court, Suite A, Champaign, IL 
61821-2986, (217) 403-6222, TDD (217) 403-6240, Barry L. Ramsey
Indiana State Office, 5975 Lakeside Boulevard, Indianapolis, IN 
46278, (317) 290-3100 (ext. 423), TDD (317) 290-3343, John Young
Iowa State Office, 210 Walnut Street Room 873, Des Moines, IA 50309, 
(515) 284-4666, TDD (515) 284-4858, Ambrose H. McGuire
Kansas State Office, 1303 SW First American Place, Suite 100, 
Topeka, KS 66604-4040, (785) 271-2721, TDD (785) 271-2767, Tim 
Rogers
Kentucky State Office, 771 Corporate Drive, Suite 200, Lexington, KY 
40503, (859) 224-7325, TDD (859) 224-7422, Paul Higgins
Louisiana State Office, 3727 Government Street, Alexandria, LA 
71302, (318) 473-7962, TDD (318) 473-7655, Yvonne R. Emerson
Maine State Office, 967 Illinois Ave., Suite 4, PO Box 405, Bangor, 
ME 04402-0405, (207) 990-9110, TDD (207) 942-7331, Dale D. Holmes
Maryland--Served by Delaware State Office
Massachusetts, Connecticut, & Rhode Island State Office, 451 West 
Street, Amherst, MA 01002, (413) 253-4333, TDD (413) 253-4590, 
Donald Colburn
Michigan State Office, 3001 Coolidge Road, Suite 200, East Lansing, 
MI 48823, (517) 324-5192, TDD (517) 337-6795, Ghulam R. Sumbal
Minnesota State Office, 375 Jackson Street Building, Suite 410, St. 
Paul, MN 55101-1853, (651) 602-7782, TDD (651) 602-7830, Jackie 
Morris
Mississippi State Office, Federal Building, Suite 831, 100 W. 
Capitol Street, Jackson, MS 39269, (601) 965-4325, TDD (601) 965-
5850, Darnella Smith-Murray
Missouri State Office, 601 Business Loop 70 West, Parkade Center, 
Suite 235, Columbia, MO 65203, (573) 876-0990, TDD (573) 876-9480, 
Anita J. Dunning
Montana State Office, 900 Technology Blvd., Suite B, Bozeman, MT 
59715, (406) 585-2565, TDD (406) 585-2562, Deborah Chorlton
Nebraska State Office, Federal Building, Room 152, 100 Centennial 
Mall N, Lincoln, NE 68508, (402) 437-5594, TDD (402) 437-5093, Byron 
L. Fischer
Nevada State Office, 1390 South Curry Street, Carson City, NV, 
89703-9910, (775) 887-1222 (ext. 25), TDD (775) 885-0633, William 
Brewer
New Hampshire State Office, Concord Center, Suite 218, Box 317, 10 
Ferry Street, Concord, NH 03301-5004, (603) 223-6046, TDD (603) 229-
0536, Robert McDonald
New Jersey State Office, 5th Floor North, Suite 500, 8000 Midlantic 
Dr., Mt. Laurel, NJ 08054, (856) 787-7740, TDD (856) 787-7784, 
George Hyatt, Jr.
New Mexico State Office, 6200 Jefferson St., NE, Room 255, 
Albuquerque, NM 87109, (505) 761-4944, TDD (505) 761-4938, Art 
Garcia
New York State Office, The Galleries of Syracuse, 441 S. Salina 
Street, Suite 357, 5th Floor, Syracuse, NY 13202, (315) 477-6419, 
TDD (315) 477-6447, George N. Von Pless
North Carolina State Office, 4405 Bland Road, Suite 260, Raleigh, NC 
27609, (919) 873-2066, TDD (919) 873-2003, William Hobbs
North Dakota State Office, Federal Building, Room 208, 220 East 
Rosser, PO Box 1737. Bismarck, ND 58502, (701) 530-2049, TDD (701) 
530-2113, Donald L. Warren
Ohio State Office, Federal Building, Room 507, 200 North High 
Street, Columbus, OH 43215-2477, (614) 255-2418, TDD (614) 255-2554, 
Gerald Arnott
Oklahoma State Office, 100 USDA, Suite 108, Stillwater, OK 74074-
2654, (405) 742-1070, TDD (405) 742-1007, Anita Kinyon
Oregon State Office, 101 SW Main, Suite 1410, Portland, OR 97204-
3222, (503) 414-3325, TDD (503) 414-3387, Jillene Davis
Pennsylvania State Office, One Credit Union Place, Suite 330, 
Harrisburg, PA 17110-2996, (717) 237-2281, TDD (717) 237-2261, Frank 
Wetherhold
Puerto Rico State Office, 654 Munoz Rivera Avenue, IBM Plaza, Suite 
601, Hato Rey,

[[Page 8341]]

PR 00918, (787) 766-5095 (ext. 249), TDD (787) 766-5332, Pedro Gomez
Rhode Island--Served by Massachusetts State Office
South Carolina State Office, Strom Thurmond Federal Building, 1835 
Assembly Street, Room 1007 Columbia, SC 29201, (803) 253-3432, TDD 
(803) 765-5697, Larry D. Floyd
South Dakota State Office, Federal Building, Room 210, 200 Fourth 
Street, SW., Huron, SD 57350, (605) 352-1132, TDD (605) 352-1147, 
Roger Hazuka or Pam Reilly
Tennessee State Office, Suite 300, 3322 West End Avenue, Nashville, 
TN 37203-1084, (615) 783-1375, TDD (615) 783-1397, Don Harris
Texas State Office, Federal Building, Suite 102, 101 South Main, 
Temple, TX 76501, (254) 742-9758, TDD (254) 742-9712, Gayle Ledyard
Utah State Office, Wallace F. Bennett Federal Building, 125 S. State 
Street, Room 4311, Salt Lake City, UT 84147-0350, (801) 524-4325, 
TDD (801) 524-3309, David E. Brown
Vermont State Office, City Center, 3rd Floor, 89 Main Street, 
Montpelier, VT 05602, (802) 828-6021, TDD (802) 223-6365, Robert 
McDonald
Virgin Islands--Served by Florida State Office
Virginia State Office, Culpeper Building, Suite 238, 1606 Santa Rosa 
Road, Richmond, VA 23229, (804) 287-1596, TDD (804) 287-1753, Eileen 
Nowlin
Washington State Office, 1835 Black Lake Blvd., Suite B, Olympia, WA 
98512, (360) 704-7730, TDD (360) 704-7760, Robert Lund
Western Pacific Territories--Served by Hawaii State Office
West Virginia State Office, Federal Building, 75 High Street, Room 
320, Morgantown, WV 26505-7500 (304) 284-4872, TDD (304) 284-4836, 
Dianne Crysler
Wisconsin State Office, 4949 Kirschling Court, Stevens Point, WI 
54481, (715) 345-7615 (ext. 151), TDD (715) 345-7614, Peter Kohnen
Wyoming State Office, PO Box 11005, Casper, WY 82602, (307) 233-
6715, TDD (307) 233-6733, Alan Brooks


FOR FURTHER INFORMATION CONTACT: C.B. Alonso, Senior Loan Specialist, 
Guaranteed Rural Rental Housing Program, Multi-Family Housing 
Processing Division, U.S. Department of Agriculture, South Agriculture 
Building, Room 1271, STOP 0781, 1400 Independence Avenue, SW., 
Washington, DC 20250-0781. E-mail: <a href="/cdn-cgi/l/email-protection#ec8f8ec28d8083829f83ac9b888fc2999f888dc28b839a"><span class="__cf_email__" data-cfemail="0f6c6d216e6360617c604f786b6c217a7c6b6e21686079">[email protected]</span></a>. Telephone: 
(202) 720-1624. This number is not toll-free. Hearing or speech-
impaired persons may access that number by calling the Federal 
Information Relay Service toll-free at (800) 877-8339.

Eligibility of Prior Year Selected Notice of Funding Availability

    Responses: FY 2006 NOFA response selections that did not develop 
into complete applications within the time constraints stipulated by 
the corresponding State Office have been cancelled. A new response for 
the project may be submitted subject to the conditions of this Notice.
    FY 2006 NOFA responses that were selected by the Agency, and a 
complete application (including all Federal environmental documents 
required by 7 CFR part 1940, subpart G, a Form RD 3565-1, and the 
$2,500 application fee) was submitted by the lender within 90 days from 
the date of notification of response selection (unless an extension was 
granted by the State office), will be eligible for FY 2007 program 
dollars and will compete for available FY 2007 funds without having to 
complete a FY 2007 response.

General Program Information

    Program Purpose: The purpose of the GRRHP is to increase the supply 
of affordable rural rental housing, through the use of loan guarantees 
that encourage partnerships between the RHS, private lenders, and 
public agencies.
    Responses Must be Submitted by: The Agency will only accept 
responses from GRRHP eligible or approved lenders as described in 7 CFR 
3565.102 and 3565.103 respectively.
    Qualifying Properties: Qualifying properties include new 
construction for multi-family housing units, the acquisition of 
existing structures with a minimum per unit rehabilitation expenditure 
requirement in accordance with 7 CFR 3565.252, and the revitalization, 
repair and transfer (as stipulated in 7 CFR 3560.406) of existing 
direct section 515 housing (transfer costs are subject to Agency 
approval and must be an eligible use of loan proceeds as listed in 7 
CFR 3565.205). Equity payment, as stipulated 7 CFR 3560.406, in the 
transfer of existing direct section 515 housing, is an eligible use of 
loan proceeds. In order to be considered, direct section 515 housing 
projects must need repairs and/or undergo revitalization of a minimum 
of $6,500 per unit.
    Eligible Financing Sources: Any form of Federal, state, and 
conventional sources of financing can be used in conjunction with the 
loan guarantee, including Home Investment Partnership Program (HOME) 
grant funds, tax exempt bonds, and low income housing tax credits.
    Maximum Guarantee: The Agency can guarantee the ``permanent'' 
portion or both the ``construction and permanent'' portions of a 
construction/permanent loan. The Agency cannot, however, guarantee only 
the ``construction'' portion of a construction/permanent loan.
    The maximum guarantee for a permanent loan will be 90 percent of 
the unpaid principal and interest up to default and accrued interest 90 
calendar days from the date the liquidation plan is approved by the 
Agency, as defined in 7 CFR 3565.452. Penalties incurred as a result of 
default are not covered by the guarantee. The Agency may provide a 
lesser guarantee based upon its evaluation of the credit quality of the 
loan. The Agency liability under any guarantee will decrease or 
increase, in proportion to any increase or decrease in the amount of 
the unpaid portion of the loan, up to the maximum amount specified in 
the Loan Note Guarantee.
    The maximum guarantee of construction advances will not at any time 
exceed the lesser of 90 percent of the amount of principal and interest 
up to default advanced for eligible uses of loan proceeds or 90 percent 
of the original principal amount and interest up to default of the 
loan. Penalties incurred as a result of default are not covered by the 
guarantee. The Agency may provide a lesser guarantee based upon its 
evaluation of the credit quality of the loan.
    Reimbursement of Losses: Any losses will be split on a pro-rata 
basis between the lender and the RHS from the first dollar lost.
    Interest Rate: RHS will accept the best rate negotiated between the 
lender and prospective borrower. The lender is not required to provide 
the interest rate in the response. When applying for interest credit, 
the lender must provide the basis points over the Long Term Monthly AFR 
that it will use to calculate the loan note's interest rate. The 
interest rate must be fixed over the term of the loan.
    Interest Credit: For at least 20 percent of the loans made during 
each fiscal year, the Agency will provide assistance in the form of 
interest credit, to the extent necessary to reduce the agreed-upon rate 
of interest to the Long Term Monthly Applicable Federal Rate (AFR) as 
such term is used in section 42(I)(2)(D) of the Internal Revenue Code 
of 1986, 26 U.S.C. 7805, Sec. 1.42-1T. The interest credit will be paid 
in accordance with HB-1-3565 4.10 D. If 20 percent of the loans have 
not received interest credit by April 27, 2007, then RHS will award 
interest credit to those loans that initially requested interest credit 
and have the highest interest credit priority score until at least 20 
percent of the loans have received interest credit. Requests for 
interest credit must be made in the response. Lenders are not permitted 
to make requests for interest credit after

[[Page 8342]]

the selection process has taken place. When interest credit assistance 
is requested, lenders must state in the response the maximum basis 
points above the Long Term Monthly AFR that will be used to calculate 
the interest rate. Priority points will be awarded to only to those 
responses submitting proposed interest rates equal to or less than 250 
basis points above the Long Term Monthly AFR. Any response submitted 
that exceeds 250 basis points above the Long Term Monthly AFR will 
receive a deduction of 20 points from its Priority Score (refer to 
``Scoring the Priority Criteria for Selection of Projects'' section of 
this Notice). A total of 30 points will be deducted from the Priority 
Score of any response submitted that is 300 basis points or more above 
the Long Term Monthly AFR.
    Due to limited funding, and in order to distribute interest credit 
assistance as broadly as possible and minimize program costs, the 
Agency has decided to limit the interest credit to $1.5 million per 
loan. For example, if an eligible request were made for interest credit 
on a loan of $2.5 million, up to $1.5 million of the loan would receive 
interest credit. Interest credit is not available for construction 
loans. Interest credit is only available for permanent loans. Lenders 
with projects that are viable with or without interest credit are 
encouraged to submit a response reflecting financial and market 
feasibility under both funding options. Responses requesting 
consideration under both options will not affect interest credit 
selection. Due to limited interest credit funds and the responsibility 
of RHS to target and give priority to rural areas most in need, 
responses requesting interest credit must score a minimum of 55 points 
under the criteria established in this Notice.
    Surcharges for Guarantee of Construction Advances: There is no 
surcharge for the guarantee of construction advances for FY 2007.
    Program Fees for FY 2007: As a condition of receiving a loan 
guarantee, the Agency will charge the following guarantee fees to the 
lender.
    (1) Initial guarantee fee. The Agency will charge an initial 
guarantee fee equal to one percent of the guarantee amount. For 
purposes of calculating this fee, the guarantee amount is the product 
of the percentage of the guarantee times the initial principal amount 
of the guaranteed loan.
    (2) Annual guarantee fee. An annual guarantee fee of at least 50 
basis points (one-half percent) of the outstanding principal amount of 
the loan as of December 31 will be charged each year or portion of a 
year that the guarantee is in effect.
    (3) There is a non-refundable application fee of $2,500 when the 
application is submitted.
    (4) There is a flat fee of $500 when a lender requests RHS to 
extend the term of a guarantee commitment.
    (5) There is a flat fee of $500 when a lender requests RHS to 
reopen an application when a commitment has expired.
    (6) There is a flat fee of $1,250 when a lender requests RHS to 
approve the transfer of property and assumption of the loan to an 
eligible prospective borrower.
    (7) There is no lender application fee for lender approval in FY 
2007.
    Eligible Lenders: An eligible lender for the section 538 GRRHP as 
required by 7 CFR 3565.102 must be a licensed business entity or 
Housing Finance Agency (HFA) in good standing in the state or states 
where it conducts business. Lender eligibility requirements are 
contained in 7 CFR 3565.102. Below is a list of some of the eligible 
lender criteria under 7 CFR 3565.102:
    (1) Licensed business entity that meets the qualifications and has 
the approval of the Secretary of Housing and Urban Development (HUD) to 
make multi-family housing loans that are insured under the National 
Housing Act. A complete list of HUD approved lenders can be found on 
the HUD Web site at http://www.hud.gov.
    (2) A licensed business entity that meets the qualifications and 
has the approval of the Ginnie Mae or Freddie Mac or Fannie Mae 
corporations to make multi-family housing loans that are sold to the 
same corporations. A complete list of Freddie Mac approved lenders can 
be found in Freddie Mac's Web site at http://www.freddiemac.com. Fannie 
Mae approved lenders are found at http://www.fanniemae.com. For a list 
of Ginnie Mae issuers, contact Ginnie Mae at http://www.ginniemae.gov.
    (3) A state or local HFA with a top-tier rating from Moody's or 
Standard & Poors, or member of the Federal Home Loan Bank system, and 
the demonstrated ability to underwrite, originate, process, close, 
service, manage, and dispose of multi-family housing loans in a prudent 
manner.
    (4) Be a GRRHP approved lender, defined as an entity with a current 
executed multi-family housing Lender's Agreement with RHS.
    (5) Lenders that can demonstrate the capacity to underwrite, 
originate, process, close, service, manage, and dispose of multi-family 
housing loans in a prudent manner. In order to be approved the lender 
will have to have an acceptable level of financial soundness as 
determined by a lender rating service. The submission of materials 
demonstrating capacity will be required if the lender's response is 
selected. Lenders who are otherwise ineligible may become eligible if 
they maintain a correspondent relationship with an eligible lender that 
does have the capacity to underwrite, originate, process, close, 
service, manage, and dispose of multi-family housing loans in a prudent 
manner. In this case, the eligible lender must submit the response and 
application. All contractual and legal documentation will be signed 
between RHS and the lender that submitted the response and application.
    GRRHP Lender Approval Application: Lenders whose responses are 
selected will be notified by the RHS to submit a request for GRRHP 
lender approval application within 30 days of notification. Lenders who 
request GRRHP approval must meet the standards in the 7 CFR 3565.102 
and 103. Lenders that have received GRRHP lender approval in the past 
and are in good standing do not need to reapply for GRRHP lender 
approval.
    Submission of Documentation for GRRHP Lender Approval: All lenders 
that have not yet received GRRHP lender approval must submit a complete 
lender application to: Director, Multi-Family Housing Processing 
Division, Rural Housing Service, U.S. Department of Agriculture, Room 
1263, STOP 0781, 1400 Independence Avenue, SW., Washington, DC 20250-
0781. Lender applications must be identified as ``Section 538 
Guaranteed Rural Rental Housing Program'' on the envelope.
    As RHS does not have a formal application form, a complete 
application consists of a cover letter requesting GRRHP lender approval 
and the following documentation:
    (1) Request for GRRHP lender approval on the lender's letterhead;
    (2) Lenders who are HUD, Ginnie Mae, Freddie Mac or Fannie Mae 
multi-family approved lenders are required to show evidence of this 
status, such as a copy of a letter designating the distinction;
    (3) The lender's Loan Origination, Loan Servicing, and Portfolio 
Management Handbooks. These handbooks should detail the lender's 
policies and procedures on loan origination through termination for 
multi-family loans;
    (4) Portfolio performance data;
    (5) Copies of standard documents that will be used in processing 
GRRHP loans;

[[Page 8343]]

    (6) Resumes and qualifications of key personnel that will be 
involved in the GRRHP;
    (7) Identification of standards and processes that deviate from 
those outlined in the GRRHP Origination and Servicing Handbook (HB-1-
3565) found at http://www.rurdev.usda.gov/regs/hblist.html#hbw6.
    (8) A copy of the most recent audited financial statements;
    (9) Lender specific information including: (a) Legal name and 
address, (b) list of principal officers and their responsibilities, (c) 
certification that the officers and principals of the lender have not 
been debarred or suspended from Federal programs, (d) Form AD 1047, (e) 
certification that the lender is not in default or delinquent on any 
Federal debt or loan, or possesses an outstanding finding of deficiency 
in a federal housing program, and (f) certification of the lender's 
credit rating; and
    (10) Documentation on bonding and insurance.

Additional Construction Lender Requirements

    The Agency can guarantee the ``permanent'' portion or both the 
``construction and permanent'' portions of a construction/permanent 
loan. The Agency will not, however, guarantee only the ``construction'' 
portion of a construction/permanent loan.
    A lender making a construction loan must demonstrate an ability to 
originate and service construction loans, in addition to meeting the 
other requirements of 7 CFR Part 3565, subpart C. A lender who 
originates and services construction/permanent loans must agree to 
manage the construction and draw activities in the manner described in 
the Chapter 5 of HB-1-3565. Lenders must meet either the basic or the 
demonstrated eligibility test in paragraphs 2.4 and 2.5 of HB-1-3565 
and the lender approval requirements set forth in paragraph 2.6 of HB-
1-3565. Lenders must clearly identify policies and processes for multi-
family construction lending. Lenders must also provide a summary of 
their multi-family construction lending activity in the same form as 
specified in paragraph 2.5 of HB-1-3565. The Agency may, at its 
discretion, consider other types of construction loans--such as those 
for commercial development--as a substitute for multi-family 
construction experience.
    Lender Responsibilities: Lenders will be responsible for the full 
range of loan origination, underwriting, management, servicing, 
compliance issues, and property disposition activities associated with 
their projects. The lender will be expected to provide guidance to the 
prospective borrower on the RHS requirements during the application 
phase. Once the guarantee is issued, the lender is expected to service 
each loan it underwrites or contract these services to another capable 
entity.

Discussion of Notice Responses

    Content of Notice Responses: All responses require lender 
information and project specific data. Incomplete responses will not be 
considered for funding. Lenders will be notified of incomplete 
responses. Complete responses are to include a signed cover letter from 
the lender on the lender's letterhead and the following information:
    (1) Lender certification--The lender must certify that the lender 
will make a loan to the prospective borrower for the proposed project, 
under specified terms and conditions subject to the issuance of the 
GRRHP guarantee. Lender certification must be on the lender's 
letterhead and signed by both the lender and the prospective borrower.
    (2) Project specific data--The lender must submit the project 
specific data below on the lender's letterhead, signed by both the 
lender and the prospective borrower.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Lender Name............................  Insert the lender's name.
Lender Tax ID <greek-i>................  Insert lender's tax ID <greek-
                                          i>.
Lender Contact Name....................  Name of the lender contact for
                                          loan.
Mailing Address........................  Lender's complete mailing
                                          address.
Phone <greek-i>........................  Phone <greek-i> for lender
                                          contact.
Fax <greek-i>..........................  Insert lender's fax <greek-i>.
E-mail Address.........................  Insert lender contact e-mail
                                          address.
Borrower Name and Organization Type....  State whether borrower is a
                                          Limited Partnership,
                                          Corporation, Indian Tribe,
                                          etc.
Tax Classification Type................  State whether borrower is for
                                          profit, not for profit, etc.
Borrower Tax ID <greek-i>..............  Insert borrower's tax ID <greek-
                                          i>.
Borrower Address, including County.....  Insert borrower's address and
                                          county.
Borrower Phone <greek-i>...............  Insert borrower's phone <greek-
                                          i>.
Principal or Key Member for the          Insert name and title.
 Borrower.
Borrower Information and Statement of    Attach relevant information.
 Housing Development Experience.
New Construction, Acquisition With       State whether the project is
 Rehabilitation, or the Revitalization,   new construction or
 Repair, and Transfer (as stipulated in   acquisition with
 7 CFR 3560.406) of Existing Direct       rehabilitation. Transfer
 Section 515 Housing.                     costs, including equity
                                          payments, are subject to
                                          Agency approval and must be an
                                          eligible use of loan proceeds
                                          listed in 7 CFR 3565.205.
Project Location Town or City..........  Town or city in which the
                                          project is located.
Project County.........................  County in which the project is
                                          located.
Project State..........................  State in which the project is
                                          located.
Project Zip Code.......................  Insert zip code.
Project Congressional District.........  Congressional District for
                                          project location.
Project Name...........................  Insert project name.
Project Type...........................  Family, senior (all residents
                                          55 years or older), or mixed.
Property Description and Proposed        Provide as an attachment.
 Development Schedule.
Total Project Development Cost.........  Enter amount for total project.
<greek-i> of Units.....................  Insert the <greek-i> of units
                                          in the project.
Ratio of 3-5 bedroom units to total      Insert percentage of 3-5
 units.                                   bedroom units to total units.
Cost Per Unit..........................  Total development cost divided
                                          by <greek-i> of units.
Rent...................................  Proposed rent structure.
Median Income for Community............  Provide median income for the
                                          community.
Evidence of Site Control...............  Attach relevant information.
Description of Any Environmental Issues  Attach relevant information.
Loan Amount............................  Insert the loan amount.

[[Page 8344]]

 
Interest Credit (IC)...................  Is interest credit requested
                                          for this loan? (Yes or No).
Basis Points over the Long Term Monthly  Lenders seeking interest credit
 Applicable Federal Rate.                 must provide the maximum basis
                                          points above the Long Term
                                          Monthly AFR that will be used
                                          to calculate the interest
                                          rate. Priority points will
                                          only be given for basis points
                                          equal to or less than 250
                                          above the Long Term Monthly
                                          AFR.
If Above Is Yes, Should Proposal Be      If Yes, proposal must show
 Considered Under Non-Interest Credit     financial feasibility for Non-
 Selection If Scoring Does Not Meet The   IC consideration.
 Minimum Point Threshold of 55 Points
 for an Interest Credit Award?
Borrower's Proposed Equity.............  Insert amount.
Tax Credits............................  Have tax credits been awarded?
                                         If tax credits were awarded,
                                          submit a copy of the award
                                          notice/evidence of award with
                                          your response.
                                         If not, When do you anticipate
                                          an award will be made
                                          (announced)?
                                         What is the [estimated] value
                                          of the tax credits?
Other Sources of Funds.................  List all funding sources other
                                          than tax credits and amounts
                                          for each source.
Loan to Total Development Cost.........  Guaranteed loan divided by the
                                          total development costs of
                                          project.
Debt Coverage Ratio....................  Net Operating Income divided by
                                          debt service payments.
Percentage of Guarantee................  Percentage guarantee requested.
Collateral.............................  Attach relevant information.
Empowerment Zone (EZ) or Enterprise      Yes or No. Is the project in a
 Community (EC), Colonia, Tribal Lands,   recognized EZ or EC, Colonia,
 or State's Consolidated Plan or State    on an Indian Reservation, or
 Needs Assessment.                        in a place identified in the
                                          State's Consolidated Plan or
                                          State Needs Assessment as a
                                          high need community for multi-
                                          family housing.
Population.............................  Provide the population of the
                                          county, city, or town where
                                          the project is or will be
                                          located.
Is a Guarantee for Construction Being    State yes or no. The Agency can
 Requested?.                              guarantee the ``permanent''
                                          portion or both the
                                          ``construction and permanent''
                                          portions of a construction/
                                          permanent loan. The Agency
                                          will not, however, guarantee
                                          only the ``construction''
                                          portion of a construction/
                                          permanent loan.
Loan Term..............................  Minimum 25-year term .
                                         Maximum 40-year term (includes
                                          construction period).
                                         May amortize up to 40 years.
                                         Balloon mortgages permitted
                                          after the 25th year.
------------------------------------------------------------------------

    Scoring of Priority Criteria for Selection of Projects: All 2007 
responses will be scored based on the criteria set forth below to 
establish their priority for obligation of funds. Per 7 CFR 3565.5 (b), 
priority will be given to projects: in smaller rural communities, in 
the most needy communities having the highest percentage of leveraging, 
having the lowest interest rate, having the highest ratio of 3-5 
bedroom units to total units, or located in Empowerment Zones/
Enterprise Communities or on tribal lands. In addition, the Agency may, 
at its sole discretion, set aside assistance for or rank projects that 
meet important program goals. Additional points will be awarded to 
responses for the revitalization, repair, and transfers of existing 
direct Section 515 housing.
    Prior to April 27, 2007, projects with an overall score of 25 
points or more and a loan to development cost ratio less than 70 
percent will be processed and, when ready, obligated on a first-come-
first-serve basis, provided funds are available. Projects that score 
less than 25 points, and projects that score 25 points or more and do 
not have a loan to development cost ratio less than 70 percent, may be 
processed up to the point of obligation, but they will not be obligated 
until after April 27, 2007. After April 27, 2007, the Agency will 
select the highest scoring proposals using the procedure outlined in 
the DATES section of this Notice.
    Subject to available funding, all projects scoring 55 points or 
more on the seven priority criteria and that request and demonstrate a 
need for an interest credit subsidy, will receive interest credit 
awards.
    The seven priority criteria for projects are listed below.
    Priority 1--Projects located in eligible rural communities with the 
lowest populations will receive the highest points.

------------------------------------------------------------------------
                       Population size                           Points
------------------------------------------------------------------------
0-5,000 people...............................................         15
5,001-10,000 people..........................................         10
10,001-15,000 people.........................................          5
15,001-20,000 people.........................................          0
------------------------------------------------------------------------

    Priority 2--The most needy communities as determined by the median 
income from the most recent census data will receive points. The RHS 
will allocate points to projects located in communities having the 
lowest median income. Points for median income will be awarded as 
follows:

------------------------------------------------------------------------
                   Median income (dollars)                       Points
------------------------------------------------------------------------
Less than 35,000.............................................         20
35,000-less than 45,000......................................         15
45,000-less than 55,000......................................         10
55,000-less than 65,000......................................          5
65,000 or more...............................................          0
------------------------------------------------------------------------

    Priority 3--Projects that demonstrate partnering and leveraging in 
order to develop the maximum number of units and promote partnerships 
with state and local communities will also receive points. Points will 
be awarded as follows:

------------------------------------------------------------------------
      Loan to total development cost ratio (percentage)          Points
------------------------------------------------------------------------
90-100.......................................................          0
Less than 90-70..............................................         15
Less than 70-50..............................................         20
Less than 50.................................................         30
------------------------------------------------------------------------

    Priority 4--The development of projects on Tribal Lands, or in an 
Empowerment Zone or Enterprise Community will receive points. The RHS 
will attribute 20 points to projects that are developed in any of the 
locations described in this priority. The development of projects in a 
Colonia or in a place identified in the State's Consolidated Plan or 
State Needs Assessment as a high need community for multi-family 
housing will receive points. The RHS will attribute 20 points

[[Page 8345]]

to projects that are developed in any of the locations described in 
this priority.
    Priority 5--The RHS will award points to projects with the highest 
ratio of 3-5 bedroom units to total units as follows:

------------------------------------------------------------------------
          Ratio of 3-5 bedroom units to total units              Points
------------------------------------------------------------------------
More than 50%................................................          6
21%-50%......................................................          5
Less than 21%-more than 0%...................................          1
------------------------------------------------------------------------

    Priority 6--RHS will award points for basis points above the long 
term monthly AFR used to calculate the interest rate. The score for 
basis points is as follows:

------------------------------------------------------------------------
                         Basis points                            Points
------------------------------------------------------------------------
300 or more..................................................        -30
251 to 299...................................................        -20
200 to 250...................................................         10
100 to 199...................................................         15
0 to 99......................................................         20
------------------------------------------------------------------------

    Priority 7--Notice responses for the revitalization, repair, and 
transfer (as stipulated in 7 CFR 3560.406) of existing direct section 
515 housing (transfer costs, including equity payments, are subject to 
Agency approval and must be an eligible use of loan proceeds listed in 
7 CFR 3565.205) will receive an additional 20 points.
    Notifications: Responses will be reviewed for completeness and 
eligibility. The RHS will notify those lenders whose responses are 
selected via letter. The RHS will request lenders without GRRHP lender 
approval to apply for GRRHP lender approval within 30 days upon receipt 
of notification of selection. For information regarding GRRHP lender 
approval, please refer to the section entitled ``Submission Of 
Documentation For GRRHP Lender Approval'' in this Notice.
    Lenders will also be invited to submit a complete application and 
the required application fee of $2,500 to the Rural Development State 
Office where the project is located.
    Submission of GRRHP Applications: Notification letters will 
instruct lenders to contact the Rural Development State Office 
immediately following notification of selection to schedule required 
agency reviews.
    Rural Development State Office staff will work with lenders in the 
development of an application package. In response to the Notice, 
lenders must submit a response to the office address identified in the 
Notice for the scoring and ranking of a proposed GRRHP project. The 
lender must provide the requested information concerning the project, 
to establish the purpose of the proposed project, its location, and how 
it meets the established priorities for funding. The Agency will 
determine the highest ranked responses based on priority criteria and a 
threshold score.
    Notice responses will at least include the following [but the 
Agency, at its sole discretion, may request additional information]:

(1) The Project

    (a) A brief description of the proposed location of the project, 
including town, county, state, and congressional district.
    (b) A description of the property and improvements, including lot 
size, number of units, building type, type of construction, etc., 
including preliminary drawings, if available.
    (c) The proposed development schedule.
    (d) Total project development cost.
    (e) The proposed rent structure and area median income (HUD 
published area median incomes can be found online at http://www.huduser.org).
    (f) Evidence of site control by the proposed borrower or a purchase 
option.
    (g) Description of any environmental issues that may affect the 
project.
    (h) Amount of loan to be guaranteed.
    (i) Type of project (e.g. elderly or family).

(2) The Proposed Financing

    (a) Proposed loan amount and the proposed borrower's equity.
    (b) Proposed use of interest credit--If the lender proposes to use 
interest credit, this section should include the maximum basis points 
the lender will charge the borrower for the project. The interest rate 
may not be lower than the published Long Term Monthly AFR at the 
closing of the lender's loan. Selection and scoring criteria that the 
project must meet to receive interest credit will be published in the 
Notice.
    (c) Estimated development budget (total and cost/unit) and the 
proposed sources and uses of funds. This information should include all 
proposed financing sources--the amount, type, rates and terms of loans, 
tax credits, or grant funds. Letters of application and commitment 
letters should be included, if available.
    (d) Estimated loan-to-development cost ratio for the guaranteed 
loan.
    (e) Proposed Agency guarantee percentage for guaranteed loan (under 
no condition can the percentage exceed 90 percent of the loan amount).
    (f) Collateral--all security, in addition to the real property, 
proposed to secure the loan.

(3) The Proposed Borrower

    (a) The name of the borrower and the type of ownership entity. List 
the general partners if a limited partnership, officers if a 
corporation or members of a Limited Liability Corporation.
    (b) Borrower's contact name, mailing address, phone and fax 
numbers, and e-mail address.
    (c) Certification that the borrower or principals of the ownership 
are not barred from participating in Federal housing programs and are 
not delinquent on any Federal debt.
    (d) Borrower's unaudited or audited financial statements.
    (e) Statement of borrower's housing development experience.

(4) Lender Eligibility and Approval Status

    Evidence that the lender is either an approved lender for the 
purposes of the GRRHP or that the lender is eligible to apply for 
approved lender status. The lender's application for approved lender 
status can be submitted with the response but must be submitted to the 
National Office within 45 calendar days of the lender's receipt of the 
``notice to proceed with application processing'' letter.

(5) Competitive Criteria

    Information that shows how the proposal is responsive to the 
selection criteria specified in the Notice.

(6) Lender Certification

    A commitment letter signed by the lender, on the lender's 
letterhead, indicating that the lender will make a loan to the borrower 
for the proposed project, under specified terms and conditions subject 
only to the issuance of a guarantee by the Agency.
    The deadline for the submission of a complete application and 
application fee is 90 days from the date of notification of response 
selection. If the application and fee are not received by the 
appropriate State Office within 90 days from the date of notification, 
the selection is subject to cancellation, thereby allowing another 
response that is ready to proceed with processing to be selected. The 
State Office has the ability to extend this 90-day deadline for receipt 
of an application only for good cause.
    Obligation of Program Funds: The RHS will only obligate funds to 
projects that meet the requirements for obligation, including having 
undergone a satisfactory environmental review in accordance with the 
National Environmental Protection Act (NEPA) and having submitted the 
$2,500

[[Page 8346]]

application fee and completed Form RD 3565-1 for the selected project.
    Conditional Commitment: Once required documents for obligation and 
the application fee are received and all NEPA requirements have been 
met, the Rural Development State Office will issue a conditional 
commitment, which stipulates the conditions that must be fulfilled 
before the issuance of a guarantee, in accordance with 7 CFR 3565.303.
    Issuance Of Guarantee: The RHS State Office will issue a guarantee 
to the lender for a project in accordance with 7 CFR 3565.303. No 
guarantee can be issued without a complete application, review of 
appropriate certifications, satisfactory assessment of the appropriate 
level of environmental review, and the completion of any conditional 
requirements.

    Dated: February 16, 2007.
Russell T. Davis,
Administrator, Rural Housing Service.
[FR Doc. E7-3172 Filed 2-23-07; 8:45 am]
BILLING CODE 3410-XV-P


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